Econ. Ch. 6 Flashcards
Equilibrium
Point at which quantity demanded and quantity supplied are equal.
Disequilibrium
Describes any price or quantity not at equilibrium; when quantity supplied is not equal to quantity demanded in a market
Excess demand, excess supply
- When quantity demanded is more than quantity supplied
- When quantity supplied is more than quantity demanded
Price ceiling, rent control
Maximum price that can be legally charged for a good or service; price ceiling placed on rent.
Price floor, minimum wage
Minimum price for a good or service;minimum price that an employer can pay a worker for an hour of work.
problems w/ ceilings, floors
They fail to protect many consumers and hurt firms.
Shifts in supply and demand and equilibrium
Supply can increase or decrease, as well as demand. The equilibrium is affected by the two combined.
Shortage
Result of quantity demanded being greater than quantity supplied, usually because prices are too low.
Search costs
Financial and opportunity costs consumers pay when searching for a good or service.
Advantages of prices
Prices help keep the economy grow.
Incentives
A way to encourage people to take a certain action.
Spillover costs
Costs of production that affect people who have no control over how much of a good is produced.
Shifts in equilibrium
Changes in supply and demand shift the equilibrium.
